A business entity may not always find it feasible to raise the funds from a single source or a few sources with large contributions. This may lead the business entity to seek high interest loans or other channels while it would have preferred to raise funds through equity financing. Similarly there are individuals who are willing to invest in high risk, high gain private equity but this channel is not available to them as private equity investment usually demands a large amount of funds from a single source.
The most significant road block to private equity investments by retail investors is the cost associated with conducting due diligence on the business entity seeking funds. A retail investor may not be planning to invest an amount large enough for it to be feasible to individually finance due diligence on the business entity. Also, the investors may not want to invest in a business proposal for which no due diligence has been conducted.
These and other problems with equity financing exist unaddressed or illaddressed in the industry.